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It's really the German banks that are getting this bailout, why aren't they paying?
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Out and out nonsense. It may suit some agendas to pretend this is the case, but the reality is nobody forced these German and Fench groups to put their money in, they did it of their own free will. Sound familiar? Never mind that its really easy to prove that the electorate as a whole is not to be held responsible - how many people didn't vote for a TD aligned with FF? Of those who did, how many are debt free, or low debt, or capable of paying off their debts? Your list of culpable villains grows smaller and smaller, and thats before we get into details. I'm a big fan of details.But as the electorate, the buck stops with us.
What I'd like to know is why it suits your agenda to call for collective punishment, which is what you are doing.0 -
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Why would the Irish tax payer be picking up the tab for it? It would not have been one of the institutions under the guarantee.It should be pointed out that the near collapse of the largest bank in Ireland - DefPa Bank - has already cost the tax-payers in Germany a small fortune.
Lest the name doesn't ring any bells, it operates out of the IFSC and was massively bigger than all other Irish banks put together. It is a name we should be familiar with though, as it had applied for a change of regulator from Germany to Ireland. If that had gone through, it would have been the tax-payer in Ireland who would have been picking up the tab for its near collapse...0 -
Just googling DEfPa
http://en.wikipedia.org/wiki/Depfa_BankAt the end of the 1990s, the bank went through a legal restructuring, which led the bank to move its headquarters to the IFSC in Dublin, Ireland. In 2002 the Irish government specifically legislated for it.[2] Depfa Bank was purchased by German mortgage giant Hypo Real Estate in October 2007. The bank ran into liquidity problems in 2008 as a result of the economic and financial turmoil in the United States
This is what we are saying as late as 2007 Hypo (private company) were making poor investments in other private companies.
where does irish guy on minimum wage taking haircut because he is culpable and responsible come into it?0 -
[QUOTE=. The electorate are to blame because instead of thinking about where all this money was coming from and questioning the logic behind the Celtic Tiger actively cheerleaded the boom by continuing to voting these gangsters in time after time.[/QUOTE]
I dont believe that these gangster twisted your hand to remortgage your house and to blow the extra 150 k on exotic cruises,cars,etc0 -
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Amhran Nua wrote: »Out and out nonsense. It may suit some agendas to pretend this is the case, but the reality is nobody forced these German and Fench groups to put their money in, they did it of their own free will. Sound familiar? Never mind that its really easy to prove that the electorate as a whole is not to be held responsible - how many people didn't vote for a TD aligned with FF? Of those who did, how many are debt free, or low debt, or capable of paying off their debts? Your list of culpable villains grows smaller and smaller, and thats before we get into details. I'm a big fan of details.
What I'd like to know is why it suits your agenda to call for collective punishment, which is what you are doing.
It's not my agenda at all. The main point I wish to make is that as a so-called democracy, a sovereign nation, we (the electorate) should feel some responsibility for holding our own politicians to account. For example, our extremely questionable financial regulation is not something we can be proud of. From a political point of view, we get collective punishment whether we want it or not.
From an economic viewpoint, there are villains everywhere, here and abroad. The average citizen is sitting bewildered and bemused wondering what the hell happened.
I strongly believe that Ireland should not be forced to accept an over-onerous deal - there are plenty of institutions that gambled recklessly and should face the consequences.
But the role of the Irish government, and indirectly the regulator, in helping to create the "wild west" environment that helped create the current problems, is something that I find shaming. I find it bizarre that so many of my compatriots don't seem to be bothered by it.
My €.02.0 -
It is a "so-called" democracy. Have you ever been asked to vote for FF or FG? Or have you instead been offered choices between local candidates who have been polishing the parish pump for the last fifteen years? The way our electoral system is set up leads inevitably to a situation where nobody is at the wheel nationally, why do you think Cowen walked out of IMF talks to go canvassing in Donegal, and if the wrong person is at the wheel, there is no way to get them out. This needs to be recitified, but the electorate played the hand it was dealt. There can be no collective responsibility or collective punishment.It's not my agenda at all. The main point I wish to make is that as a so-called democracy, a sovereign nation, we (the electorate) should feel some responsibility for holding our own politicians to account.0 -
something I posted on another thread - didn't realise there was one open on the German banks - a lot of threads and a lot of activity merging into each other at the mo!
"the point is the German banks were trying to make money by loaning to us, they were taking a risk in doing so and now, logically if nothing else, they deserve to get burned
and I don't think the Germans were one bit less reckless in loaning to AIB than AIB were in loaning to developers. anyone involved in finance in Europe knew our boom was based on property and they all knew there would naturally be concerns as per the extent of the growth and whether it was sustainable. but they still loaned, because our star was in the ascendant, everyone else was doing it and it was probably regarded as easy money.
so we as individuals have been burnt by getting mortgages on property that is now in negative equity. i can accept that. the govt has been burned by pumping up wages for everyone and now being unable to pay those wages because of the bust. i can accept that. but I cannot accept that this generation and the next generation and the next generation of taxpayers should be burned to insulate the bond holders. it was emphatically their mistake that they loaned to the Irish banks, not ours.
now burn them.
and if that bothers the EU, then give us the money we need to avoid burning them at a rate that doesn't make it impossible for us to trade our way out of this situation."
now can someone tell me in relation to Der Spiegel graph - is it money the German banks are owed by the Irish govt or by the Irish banks?
by which I mean was it loaned to the banks or to the govt? the graph says they're owed it by 'Ireland' - which may take into account that our govt has decided to guarantee the debt. but I presume its money they lent our banks originally?0 -
Amhran Nua wrote: »It is a "so-called" democracy. Have you ever been asked to vote for FF or FG? Or have you instead been offered choices between local candidates who have been polishing the parish pump for the last fifteen years? The way our electoral system is set up leads inevitably to a situation where nobody is at the wheel nationally, why do you think Cowen walked out of IMF talks to go canvassing in Donegal, and if the wrong person is at the wheel, there is no way to get them out. This needs to be recitified, but the electorate played the hand it was dealt. There can be no collective responsibility or collective punishment.
If your point is that the electoral system in Ireland is broken and in need of major reform, I could not agree more. In one sense this is the point I am trying to make - that recent events have exposed the shortcomings of our political classes and political system.
I disagree that you cannot have collective punishment - if we keep voting the same old fools back into office, that is exactly what we are going to get.0 -
People are voting the same old fools back into the office of funeral attender, pothole and fence fixer. There is no connection between the personal relationships built up by a TD in an area and the actions of the party, in the minds of most voters. Doing small favours for big families is the only way to get ahead in politics, I've been told by elected representatives.if we keep voting the same old fools back into office, that is exactly what we are going to get.
Labour haven't even bothered their arses to come out with any policies so far. FG made some sort of an effort at that because they think they have a shot at the majority, and are trying to sweep up the undecideds, and its working.
We absolutely must fix the system, and ditch the STV, or we're going to come round to the same mess again.0 -
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something I posted on another thread - didn't realise there was one open on the German banks - a lot of threads and a lot of activity merging into each other at the mo!
"the point is the German banks were trying to make money by loaning to us, they were taking a risk in doing so and now, logically if nothing else, they deserve to get burned
and I don't think the Germans were one bit less reckless in loaning to AIB than AIB were in loaning to developers. anyone involved in finance in Europe knew our boom was based on property and they all knew there would naturally be concerns as per the extent of the growth and whether it was sustainable. but they still loaned, because our star was in the ascendant, everyone else was doing it and it was probably regarded as easy money.
so we as individuals have been burnt by getting mortgages on property that is now in negative equity. i can accept that. the govt has been burned by pumping up wages for everyone and now being unable to pay those wages because of the bust. i can accept that. but I cannot accept that this generation and the next generation and the next generation of taxpayers should be burned to insulate the bond holders. it was emphatically their mistake that they loaned to the Irish banks, not ours.
now burn them.
and if that bothers the EU, then give us the money we need to avoid burning them at a rate that doesn't make it impossible for us to trade our way out of this situation."
now can someone tell me in relation to Der Spiegel graph - is it money the German banks are owed by the Irish govt or by the Irish banks?
by which I mean was it loaned to the banks or to the govt? the graph says they're owed it by 'Ireland' - which may take into account that our govt has decided to guarantee the debt. but I presume its money they lent our banks originally?
Exposure to banks. Although it doesnt indicate whether they hedged on the derivatives markets (insured against default) but the debts are out there somewhere.0 -
ok thanks.
now does anyone have any view on the extent to which the guarantee given in 2008 is legally binding, either at all or on future governments? it may be irrelevant if we simply can't pay it but it would be interesting to know.
its arguable that there was no consideration given in return for the guarantee, i.e., the guarantee didn't induce the original loans so we can renounce it as regards pre guarantee bonds. however, subsequent loans given in the light of the guarantee might be in a different position.
edit: actually we virtually own the banks now so the debts are enforceable against us. well played lads0 -
Getting back to the original topic:
"It's really the German banks that are getting this bailout, why aren't they paying?"
The answer is fairly simple in my opinion.
Since for a loan to occur it must have the consent of both the lender and the borrower, half the responsibility lies with the lender for that loan and the other half with the borrower. I think most people would be fairly happy with this principle. If you lend to me then I have a responsibility to pay you back based on the terms of the loan, but if I fail to pay you back for whatever reason, it is still your responsibility to meet your obligations with regards other parties. You don't have the automatic right to go to the state or anyone else expecting assistance. You must take your part of the responsibility.
Now applying this to the Irish situation. Irish banks lent to property developers and others who built housing estates in the middle of nowhere. These houses failed to sell and the developers were unable to pay the money back. Now while the developers did not face up to their responsibilities: they should not have taken out those loans, neither did the bank take appropriate steps to ensure it was lending wisely. The fact that they subsequently went to the State and did receive assistance is not the issue here. The issue is where their responsibility lay and did they operate responsibly.
The same principle applies to the German banks unwisely lending to Irish banks. The German bank has the right to go to the Irish banks for their money but they don't have the right to go to the Irish government or the Irish tax payer. If their own German government wants to help them out then that is their affair, of course.
Therefore in these negotiations the Irish government needs to be very clear on where the various responsibilities lie. We must not get roped in to accepting liability where none exists.0 -
just to put a different angle on it ...
The ordinary Joe Soap in Germany was just as clueless as to what their banks were doing as we were. And even if they weren't clueless, they were just as powerless.
The are two kinds of "The Germanz" here ...the German financial institutions who milk the system for what it's got (just like Fitz & Fingers) and the ordinary people who end up paying for it all.
Everbody keeps harking on about how rich and powerful "The Germanz" are ...well ask the guy in the street how deep his pockets are ...they aren't.
Real income has been stagnant in Germany for years, social welfare and pensions have been seriously reduced (Hartz 4) and they still carry lots of structural problems (areas with huge debt and unemployment for example).
Mainly because they (the ordinary people) have been paying for their banks, our banks, everybody elses banks for years and will have to continue to do so for more years to come.
So, please try to differentiate and don't throw all of "The Germanz" into the same pot.
The ratio of influence over governement and political decisions for institutions (banks, corporations, vested interests) vs people in Germany is about just as bad as it is here.
But here in Ireland at least we got to enjoy the 8 Euro breakfast roll for a few years ...the Germans didn't0 -
And the French banks, and the UK - even the US. Our banks are being bailed out because they were lent to by everybody during our bubble. The whole crisis has been about bailing out the banks, and unluckily the banks dwarf the states in terms of money - which means that the choice is between trying to socialise the costs of reckless banking as we're currently doing, or socialising the costs of reckless banking through allowing the banks to implode. Neither option is painless.
cordially,
Scofflaw
I don't believe either option works.
A third option that has not been discussed - for whatever reason. An orderly wind down of the debt across territories, that would not lead to a banking collapse.
I believe all the irresponsible behaviour of the last decade was down to the believe the debt would be socialised. No one who would have had an overview of the entire situation would have believed otherwise.
And now
Ireland has been turned into a huge collective farm to pay off private debt. It's insane that it should have come to this.
There needs to be a political solution that throws all the "free market" neo liberal horsesh1te in the bin and works out a way for Europe and even the US to get out of their debt burden, so we can have growing economies again. The current situation is the road to nowhere for everyone for the next decade at least - unless something is done to deal with the situation.
Anyway, we're only forestalling the inevitable the current debt burden is so bad, it's going to lead a banking collapse anyway.0 -
jSo, please try to differentiate and don't throw all of "The Germanz" into the same pot.
The ratio of influence over governement and political decisions for institutions (banks, corporations, vested interests) vs people in Germany is about just as bad as it is here.
Have lived in Munich and have nothing but respect for the German people. In many ways they are a fine example of how to live. enjoyed my time there immensly
This is not Irish verses German. Its private company debt v public responsability.0 -
Whilst I'm not sure of the legalities I think it is more a case that if we fail to honour our guarantee the reputation of Ireland suffers rather than we incur legal penalties. The legal issues no doubt exist but they may not be the primary consideration here, and of course, the reputation of Ireland has already suffered in part because it extended the guarantee to the banks when it was not in a position to do so and consequently requires assistance from the IMF.its arguable that there was no consideration given in return for the guarantee, i.e., the guarantee didn't induce the original loans so we can renounce it as regards pre guarantee bonds. however, subsequent loans given in the light of the guarantee might be in a different position.
edit: actually we virtually own the banks now so the debts are enforceable against us. well played lads0 -
well i reckon our reputation is FUBARed anyway, but whats the point in having a reputation if no-one will loan to you because you can't afford to pay it back
whereas if we stopped throwing good money after bad into the banks at some point we would conceivably be able to pay back loans again because we hadn't thrown it into the pit
damaging your reputation is not a good idea, but if its either that or take on a loan that is going to cripple our country for generations, then I think its a no brainer...0 -
I agree with this. We made a mistake in guaranteeing those banks. We need to admit this to ourselves. Having done that we now need to undo that mistake as best we can and this means placing the burden of debt back with those who incurred that debt. If they can't pay, then that is an issue between the lender and the borrower and if this pisses off people in other countries then that is too bad. They were never going to be paid anyway since the state did not have the resources to make that guarantee in the first place.well i reckon our reputation is FUBARed anyway, but whats the point in having a reputation if no-one will loan to you because you can't afford to pay it back
whereas if we stopped throwing good money after bad into the banks at some point we would conceivably be able to pay back loans again because we hadn't thrown it into the pit
damaging your reputation is not a good idea, but if its either that or take on a loan that is going to cripple our country for generations, then I think its a no brainer...0 -
No, I think the corporation tax rate is fairly widely understood to be integral to Ireland's economy insofar as things are generally understood by the ordinary person in the street anywhere. Look at the way it has been used by the likes of Sinn Fein in the Lisbon treaty campaign to appeal to the voter in that referendum. If nobody knew about it, it wouldn't have been used.I'll say it again - Ireland has run a quite deliberately lax and opaque regime for financial transactions for many years now. That's why we get referred to as a semi tax haven (see here, here) - because we have been operating as one. And that's where we got a lot of our employment and tax revenues. It's also why everything seems so murky. It's also why our tax laws are a red line for the government in bailout negotiations.
We like to claim, as Irish citizens, to be innocent of the whole thing - but it was only ignorance, not innocence, and the Germans are quite familiar with that defence. We didn't ask where the money came from for our boom - we assured ourselves that it was well deserved because we were just naturally more productive and better at things. It's worth taking a look back over the last decade in the light of the fact that the government - courtesy of CJH's brilliant scheme - has been operating a tax haven for banks and multinationals, and using the money from that to fund lower income taxes and higher social spending.0 -
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The notion of burning the senior bondholders was floated on the RTE TV news this evening, with the suggestion that the IMF was sympathetic to the idea but the EU/ECB steadfastly resisting it.
I can't express my opinion any better than Professor Louis Brennan of the TCD School of Business in his letter to Tuesday's Financial Times (can't link, behind a paywall):
Sir, Phillipe Legrain is correct (“Don’t blame the euro for Ireland’s mess”, November 18th, 2010). Bondholders should bear losses and they should do so now.
Imagine foreign drug lords flooding Ireland with an addictive matter leaving indigenous junkies in such a dysfunctional state that their capacity to meet their liabilities to the drug lords was compromised. Would European and global institutions then demand that an already indebted Irish Government seek loans to cover the full liabilities of these junkies to the drug lords? Hardly.
Yet this is effectively what the Irish Government has now agreed to do in relation to Irish banks’ bondholders. The only sustainable solution to the current debt crisis is one that involves all those with a part in its making, contributing to its solution. However by continuing to bow to the nihilism of reckless bondholders and failing to require them to contribute to the solution, European and global institutions are simply ensuring that the debt crisis will not be contained. Consigning the farcically rigged system of complete indulgence for reckless lenders to history is a sine qua non for resolving the current debt crisis. (My emphasis.)0 -
Correctly if I am wrong but from business point of view...
If you run a company and there is high rate of tax on the gross revenue...would you try to increase the business expenses such as research, wages, trainig, improving work practices so that the less will be taken away as tax...
In a way... is it a good thing...? Or am I too idealistic?:p0 -
Agree with the sentiment but the analogy is wrong. The "junkies" numbered at most say 20,000. Who mixed in the same circles. This was not a flood of people getting hooked in Ireland
The normal working person in Ireland is paying their way. The mortgage debt and credit debt (as far as I know) is not what this bailout is for.0 -
SkepticOne wrote: »No, I think the corporation tax rate is fairly widely understood to be integral to Ireland's economy insofar as things are generally understood by the ordinary person in the street anywhere. Look at the way it has been used by the likes of Sinn Fein in the Lisbon treaty campaign to appeal to the voter in that referendum. If nobody knew about it, it wouldn't have been used.
The rate isn't the problem. A couple of countries in the EU have lower ones and a few just above us, it's the "liberal" laws.
This would be an example and why CCTB is such a huge fear:
Google saved $3.1bn in taxes in past 3 years using 'Double Irish ' scheme; Google has paid no tax in UK since 2007 - - one of its biggest overseas marketsMad Men's Don Draper : What you call love was invented by guys like me, to sell nylons.
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The German view of inflation seems to be heavily coloured by the series of events that led from the Weimar Republic through WW2 to having their country bombed flat and everybody raped by the Russians, with a lingering aftermath of shame because they didn't question their government too closely about its plans for ethnic minorities.
Which is a pity, because a good dose of inflation would make everybody's debt more manageable.
cordially,
Scofflaw
Would high inflation not mean that the banks would have to increase mortgage rates and escalate the looming homeowners' default catastrophe?0 -
Agree...
Probably inflation now sounds more like it...water in a flaming frying pan...0 -
The notion of burning the senior bondholders was floated on the RTE TV news this evening, with the suggestion that the IMF was sympathetic to the idea but the EU/ECB steadfastly resisting it.
I can't express my opinion any better than Professor Louis Brennan of the TCD School of Business in his letter to Tuesday's Financial Times (can't link, behind a paywall):
Sir, Phillipe Legrain is correct (“Don’t blame the euro for Ireland’s mess”, November 18th, 2010). Bondholders should bear losses and they should do so now.
Imagine foreign drug lords flooding Ireland with an addictive matter leaving indigenous junkies in such a dysfunctional state that their capacity to meet their liabilities to the drug lords was compromised. Would European and global institutions then demand that an already indebted Irish Government seek loans to cover the full liabilities of these junkies to the drug lords? Hardly.
Yet this is effectively what the Irish Government has now agreed to do in relation to Irish banks’ bondholders. The only sustainable solution to the current debt crisis is one that involves all those with a part in its making, contributing to its solution. However by continuing to bow to the nihilism of reckless bondholders and failing to require them to contribute to the solution, European and global institutions are simply ensuring that the debt crisis will not be contained. Consigning the farcically rigged system of complete indulgence for reckless lenders to history is a sine qua non for resolving the current debt crisis. (My emphasis.)
The EU Commissioner here. Mr. Rehns?, has said he favours bondholders taking a hit.
There is a move to tackle financial issues re lax regulation in the EU as well, eg. hedge funds:
FT.com / Europe - EU agrees tougher rules for hedge funds
That appetite is there as shown by Merkels words as well.
Maybe rather than demanding the EU let us burn the bondholders we should take a more conciliatory approach?
There will always be politicians who will oppose measures like that, but that is to be expected from an organisation representing 27 different countries.Mad Men's Don Draper : What you call love was invented by guys like me, to sell nylons.
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Amhran Nua wrote: »People are voting the same old fools back into the office of funeral attender, pothole and fence fixer. There is no connection between the personal relationships built up by a TD in an area and the actions of the party, in the minds of most voters. Doing small favours for big families is the only way to get ahead in politics, I've been told by elected representatives.
Labour haven't even bothered their arses to come out with any policies so far. FG made some sort of an effort at that because they think they have a shot at the majority, and are trying to sweep up the undecideds, and its working.
We absolutely must fix the system, and ditch the STV, or we're going to come round to the same mess again.
Now if only the alleged Political Party in your sig was actually registered, or likely to put up any candidates in the next election, we might actually have a voice for change, instead all we have is one muppet, with a fancy pic in his sig, trumpeting change, while sitting in front of his laptop, on his couch, actually doing nothing.
I hate to see all your rhetoric, some of which I agree with, some I don't, amounts to nothing more than a loud voice on boards, a pretty poor website, and nothing else of note.0 -
kaiser sauze wrote: »Would high inflation not mean that the banks would have to increase mortgage rates and escalate the looming homeowners' default catastrophe?
Unfortunately, yes - but on the other hand, the banks will probably have to raise mortgage rates anyway.
cordially,
Scofflaw0 -
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Bob_Latchford wrote: »Agree with the sentiment but the analogy is wrong. The "junkies" numbered at most say 20,000. Who mixed in the same circles. This was not a flood of people getting hooked in Ireland
The normal working person in Ireland is paying their way. The mortgage debt and credit debt (as far as I know) is not what this bailout is for.
Pretty spot on I'd say with regard the current bailout does not touch on mortgage/consumer debt (yet).
Unfortunately AIB are also up to their eyeballs in NAMA debt and BOI not much better. The whole banking system is fubared because of it and this would feed into the general economy, as we can see already.
It is absolutely neccessary to negotiate and stop putting 100% on Irish taxpayers though, I urge everybody to use whatever means they can to resist this bailout being pushed through by a government that has a matter of weeks left in office!0
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